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Posted Fri, 18 Aug 2023 17:38:51 GMT by
Hi, I left a job, received my holiday and notice pay, and an ex-gratia payment (less than £30k). I entered the total income for that employment using my P45, which includes the PILON amount. I am now completing the section "Other UK Income". On the "Employment lump sums" do I still need to enter the PILON payment, even though it's already included within my total employment earnings?
Posted Tue, 22 Aug 2023 13:35:15 GMT by HMRC Admin 17 Response


Hi,
 
You wont include it as other income but you may want to claim the relief on it as redundancy pay.

If filing online, answer yes to the question do you want to claim rleief and this opens other boxes -
you want Redundancy, other lump sums and compensation payments  .

Thank you.
Posted Tue, 22 Aug 2023 17:19:03 GMT by
Hi, regarding the tax relief you mentioned: Let's say my ex-gratia payment was £9k. Does this mean I have (30k - 9k) = £21k tax-free allowance for my notice pay + unused holiday?
Posted Tue, 22 Aug 2023 17:25:10 GMT by
Hi, sorry I've just realised I think you may have misinterpreted my original message. I didn't pay any tax on the ex-gratia payment, only my unused holiday and notice pay. I presume this means there is no relief to claim?
Posted Wed, 30 Aug 2023 10:49:24 GMT by HMRC Admin 25 Response
Hi tax77,
Ex-gratia payments of up to £30000.00 are not taxable.
Payments in Lieu of Notice (PILONs) or notice pay, are taxed as earnings, alongside your unused holiday pay.
Provided your relevant net income is below £100000.00, you will be entitled to £12570 of your income to be tax free.
For every £2.00 above this threshold, your personal allowance will reduce by 1 allowance.
Thank you. 
 

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